What Does Business Ethics Really Mean?

Business ethics is getting a lot of press these days. Perhaps it is in part due to some glaring failures in business judgment (see Enron as a prime example), but the news is not all negative. The Wall Street Journal has an entire topic dedicated to ethics on their website and much of what you will find is inspiring, educational or at least a foundation in good guidance. Forbes publishes a list of the most ethical companies and the New York Times tackled the subject at the beginning of this year in a piece on how to best drive ethical behavior.

With all the news fodder, what does it really mean? Yes, there are clear definitions, some simple and others verbose, but in the end it seems that what is ethical in business is like beauty, in the eye of the beholder. What happens is that in many cases, justifications come into play to devalue one’s personal sense of what is right and wrong, and this is the tension I want to discuss.

Companies, and in particular large and public companies, have a fiduciary responsibility to deliver revenue to share holders. There are robust conversations around boardrooms about ROI (return on investment), cost of business, strategic growth opportunities and barriers to entry (to choose but a few of the buzz phrases). In order for a company to be ethical, it needs to be willing to debate the same impact on organizational as well as societal values as it does in how to build its business. The challenge is in how to manage the debate, work though the differences in opinion and get down to tactics. Part of that is because each individual has his or her own judgments on right and wrong, and like it or not, we are each somewhere on a spectrum in relationship to our peers, our bosses or our competitors.

I’ve had the privilege of being part of these conversations at large public companies and at small, passionate family owned business as well as everything in between. I’ve watched major industry players decide not to execute a marketing program, one that many of their competitors engaged in because it “felt misleading” even though there was nothing specific anyone could pin point as false data. I’ve also had a small business owner tell me flat out he was not going to pay his debts because he had sold the company and made his money and had no legal obligation to do anything. (Full disclosure, I have hopes he will have a change of heart and I will get my check…)

Today there are a million causes to support and a flurry of messages that tell us everything that is right (or wrong) about any given topic. It can be overwhelming. In order for a business to be ethical, it does not have to be perfect, as this is unattainable. What it needs to be willing to do is be reflective, to hear the criticism of its detractors and honestly see if there is something to the critique. And just as important is to listen to those that sing your praises, because being ethical means keeping everything in perspective. If an advocate falsely props you up, correcting this is just as valuable as to come to terms with your flaws.

So how does one do this? It’s not easy to make the process endemic throughout all elements of your business, but it has to start somewhere and that is with the top. When leadership clearly articulates where their values sit and operates with transparency to it’s staff so that they can see the course corrections, missteps, acknowledgements of failure or reward for those that they see operating in line with the ethics, then it becomes routine. If you are a leader and you are willing to “turn the other cheek”, brush off your values for a profitable decision or enjoy basking in the limelight of a false victory, then don’t be surprised (or judgmental) when your staff do the same.

Right and wrong is a learning process. Certainly I have made mistakes that were not knowingly unethical at the time, but based on poor information. However once the information is present, even if disclosing your error has no effect on the outcome previous, it must be done. This is how we create the muscle tissue to think ethically and foster this in those around us. The first step is in seeking the truth and the willingness to let values drive decisions more than P&L statements. And the irony is that more and more, the engaged consumer is seeking brands they respect and trust. You may not win today, but over time, an ethical and values based decision process will retain the right team, attract the right consumer and pay dividends you can be proud of.

One Response to “What Does Business Ethics Really Mean?”

Scott: Are you kidding me!? Business ethics in America! Ha! I’ve been in the Healthcare Industry-you know the industry “concerned” with the quality of life for individuals. Business Ethics is an Oxymoron. There is no such thing when it comes to money in the “real” world. Please stop spewing this crap about rainbows and unicorns in business, it’s the pragmatics that achieve the most.

It’s a dog eat dog word,more so today then ever before, morals and ethics be damned, just try not to get caught breaking the law.